TOPEKA, Kan. (AP) -- The University of Kansas' efforts to raise higher education funds from private donors and research grants continue at a brisk pace, but state support is still critical, according to the school's leader.

University Chancellor Bernadette Gray-Little told The Topeka Capital-Journal (http://bit.ly/1dRn9tB ) that while outside research grants hit record levels, further gains may be difficult because of federal budget constraints.

"We're at a record level in terms of our external research funding," she said. "Because of the (federal) sequestration and reduction in levels of funding for different agencies, most of the indicators that we looked at suggested the level of available funding is going to go down."

The university has recorded $957 million in private funds toward its goal of raising $1.2 billion by 2016 as part of its "Far Above" campaign. The effort is aimed at investing in student and faculty initiatives, program enhancements and building projects on the main campus in Lawrence and the medical campus in Kansas City, Kan.

"The campaign is going very well," Gray-Little said. "We've had extraordinary alumni, friends and donors who are willing to help the university in so many ways."

Research funding topped $171 million in 2012, compared with $162 million a year earlier.

Gray-Little, who has been chancellor since 2009, said state support for higher education helps with fundraising efforts by demonstrating a partnership for improving the university.

"The donors are giving funds to enhance programs, not to substitute for the state," the chancellor said.

State funding for the entire Kansas Board of Regents system of universities, community colleges and technical schools was reduced by more than $30 million over the next two budget years. The chancellor said the cuts limited faculty hiring and increased class sizes at the medical school. She said further cuts could make it a challenge for the medical center to earn comprehensive cancer institute status.

Gray-Little said progress was being made with undergraduate students, including implementing a new core curriculum aimed at improving the retention rate of the freshman class to 90 percent and the six-year graduation rate to 70 percent. In addition, the honors program was expanded to handle 400 freshmen, up from 275.

"It is a class that is really an outstanding class," the chancellor said. "This is 4,000 students with the highest ACT scores in university history and the highest percent of diversity in university history. It reflects the investment we made in our recruiting the last three years."